Train Marker Lights are A way to tell the status of a train. and can be used to prevent rear end collisions.
I am unable to find when they were first used (Or who invented it, Probably on some very obscure website), But from what I can tell they were in use for a long time. the lights are seldom used nowadays replaced by modern tech, and the places that still use them are smaller older railroads (like yours in RRO!(If it wasn't in the 1800s)) and most likely used for aesthetic (On non service locos) than any purpose.

(Please note this list is still growing. I will add locos/cars to the list when I get them in game)

and what they mean

For Locomotives
These only apply When the Lights are on the Locomotive. and not on the caboose/waycar

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Green: Indication that the Locomotive is a regularly scheduled one. and That there may be one or more Sections (More trains) following behind the current Locomotive (Basically when more than one train shares a block). Also Every train following that train EXCEPT for the last one will also have green marker lights

trust me that is green.




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Red: Indicated to be the end of a Train when the train is traveling in reverse (Red On the locomotive) Dim headlights can also be used (If you have the luxury of electricity on your loco).




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White/amber: (I'm assuming these are the same. In game it looks amber) White Lights are used to indicate a extra train that was not scheduled but added due to demand. Would most likely to be seldom used in RRO due to there being no schedule. (Recently updated to be more amber, ingame image outdated)



Please mind I got this info from Wikipedia and Trains magazine. This may be incorrect.

and what they mean

Lanterns can be placed in the Cupola, the sides of a caboose and on the sides of a way car
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Green: Parked on a sideline waiting for a train to pass.

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Red: Actively moving on the track. used to prevent rear end collisions from Locomotives traveling behind the current train.

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White: Not used, You could add your own meaning.

Its the 1880's, The only thing standard is the 3 foot gauge track and the finger remover coupling system. You are isolated with no way out of the valley. Any attempts to make it out were blocked by a invisible force. so why not make up your own System? You could use the lights in a combination to indicate where you are going, Or use the lights as a way to lure your victims into the darkness never to be seen again or you could have a priority system.. The possibility's are endless.

You may ask, How do you use marker lights in RRO. It is simple, There are only a few Locomotives that support Marker Lights but the snowplow, caboose and way car support it.
Locate one off these lamp holders, They look like brackets or little cages

And Click to insert the lamp

If you want to change Color, Just click again!

Clicking will cycle through the colors until you get to white, where clicking again will remove the Lantern.

After Looking at (Almost) every Locomotive. I have made this list. I hope they add support to more Locomotives.

Unfortunately though people that are not the host of the server can see only a few cars back.

Please mind I may not be 100% correct and every railroad might use different meanings. These are the Modern day meanings. and there isn't a lot of info readily available.

wow

Railroaders magazine
https://www.trains.com/trn/train-basics/abcs-of-railroading/locomotive-classification-lights/
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Wikipedia
https://en.wikipedia.org/wiki/Train_lights
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Model Railroader
https://cs.trains.com/mrr/f/13/t/16244.aspx
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Train Orders
https://www.trainorders.com/discussion/read.php?1,1056417